The SACCI Business Confidence Index (BCI) for December 2014 has been released by the South African Chamber of Commerce and Industry (SACCI), revealing that confidence has slipped.
The organisations released the following statement:
The BCI shed 2,5 index points in December 2014 and declined from 90,8 in November to 88,3. The BCI is 3,6 points below the December reading of 2013. The 88,3 is the lowest level since July 2014 when the BCI measured 87,9. Given the highest level of 122,1 for the BCI in December 2006, the present level remains a matter of grave concern.
The average for the BCI in 2014 was 90 compared to 91,4 in 2013. The previous lowest annual average was 87,6 in 1999 and the highest BCI annual average was 118,8 in 2006 with the BCI at 100 in 2010 which serves as base year.
Although the subdued business confidence was broad based (five of the 13 sub-indices were positive year-on-year), the rand exchange rate made a marked negative impact. The financial situation was weaker than in December 2013. Four of the seven physical activity sub-indices of the BCI recorded changes that were positive (month-to-month) in December compared to three in November 2014 – confirming subdued economic activity.
The immediate economic outlook for South Africa is largely influenced by the much lower international crude oil price and electricity power shortages. These two developments are contrary to each other in influencing the economy. The dismal performance by the rand exchange rate and a strong US dollar are main causes for not taking full advantage of the lower US dollar crude oil price.
SACCI is concerned that the electricity shortages will cause the economy to stagnate at low levels of activity. An apathetic approach to economic challenges has led to the constrained environment South Africa finds itself in. SACCI’s BCI reflects a perspective on the situation.
